Carla Vista Unlimited is considering purchasing an additional delivery truck that will have a seven-year useful life. The new truck will cost $44,900. Cost savings with this truck are expected to be $13,700 for the first two years, $9,500 for the following two years, and $5,400 for the last three years of the truck's useful life. What is the payback period for this project? (Round answer to 2 decimal places, e.g. 52.75.) Payback period years What is the discounted payback period for this project with a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 52.75.) Discounted payback period years

Carla Vista Unlimited is considering purchasing an additional delivery truck that will have a seven-year useful life. The new truck will cost $44,900. Cost savings with this truck are expected to be $13,700 for the first two years, $9,500 for the following two years, and $5,400 for the last three years of the truck's useful life. What is the payback period for this project? (Round answer to 2 decimal places, e.g. 52.75.) Payback period years What is the discounted payback period for this project with a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 52.75.) Discounted payback period years

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Elijah Enterprises will need to upgrade the computer system in 6 years. They anticipate the upgrade to cost $95,300. If the discount rate is 15%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 8%? Future Value / (1+R)^n = Amount Required / =
Your organization is planning to purchase a new office building four years from now. The building will cost $8,000,000, have a useful life of 30 years, and have no salvage value. If your organization currently has put aside $1,500,000 in an investment account with an annual interest rate of 4.8%, how much additional money must your organization deposit into the account each month in order to be able to purchase the building in four years? (select one)
A developer plans to start construction of a building in one year if at that point rent levels make construction feasible. At that time the building will cost $1,340,000 to construct. During the first year after construction would take place, there is a 60 percent chance that NOI will be $175,500 and a 40 percent chance that the NOI will be $88,600. In either case, NOI would be expected to increase at 2 percent per year after the first year. Required: How much should the developer be willing to pay for the land if he wants a 12 percent rate of return? (Round your answer to the nearest whole dollar amount.) Amount payable by developer $ 1,334,444
If a garden center is considering the purchase of a new tractor with an initial investment cost of $127,000, and the center expects a return of $31,000 in year one, $21,000 in years two and three, $15,000 in years four and five, and $12,000 in year six and beyond, what is the payback period? ______ years
A commercial 3D printer is purchased for $350,000. The salvage value of the printer decreases by 30% each year that it is held. The cost to operate and maintain the machine the first year it is used is $14,000; these costs increase by $5,000 each year. What is the optimal replacement interval and minimum EUAC for the printer, assuming a MARR of 13% is used? Click here to access the TVM Factor Table Calculator. years ORI: EUAC*: $ Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance is ±5 for the EUAC*.
A forklift will last for only 4 more years. It costs $6,500 a year to maintain. For $20,000 you can buy a new lift that can last for 10 years and should require maintenance costs of only $3,500 a year. a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 4% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a-2. Should you replace the forklift? b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 14% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b-2. Should you replace the forklift? a-1. Equivalent cost a-2. Should you replace the forklift? b-1. Equivalent cost b-2. Should you replace the forklift? $ Yes $ No 23,594.51 18,256.40
A firm is considering investing in a new piece of equipment. The equipment would cost $500,000 and would have shipping and installation cost of $125,000. If purchased, the machine would have an estimated useful life of 5 years and would be depreciated via a 5-year MACRS schedule (e, 20.0%, 32.0%, 19.2 %, 11.5%, 11.5%, and 5.8%). Adoption of the project would also require an increase in working capital of $50,000. If the new equipment is purchased, an old piece of equipment (which is still useable for 5 more years) could be sold for $30,000. The old machine had been depreciated on a straight line basis and currently has a book value of zero. The machine would generate annual incremental revenues of $250,000 and annual incremental expenses of $50,000. It is estimated that the machine can be sold as scrap at the end of its 5 year useful life for $80,000. The required return on projects of this nature is 14% and the firm's marginal tax rate is 40%. What is cash flow from the project for…
Bond valuation. Estonian company issued 10-year bonds exactly four years ago at a coupon rate of 4%. The bonds make semi-annual payments, and the par value of bonds is 100 000. Meanwhile, the interest rates have risen considerably and the effective yield (e.g. EAR) of comparable bonds is currently 7.4% percent. Try to estimate the current bond price. you should consider correct nominal rate for discounting that reflects the actual effective yield. with excel formulas if possible
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer’s base price is $920,000, and it would cost another $20,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $500,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $15,500. The sprayer would not change revenues, but it is expected to save the firm $304,000 per year in before-tax operating costs, mainly labor. Campbell’s marginal tax rate is 25%. a. What is the Year-0 cash flow? b. What are the cash flows in Years 1, 2, and 3? c. What is the additional Year-3 cash flow (i.e., the after-tax salvage and the return of working capital)? d. If the project’s cost of capital is 12%, what is the NPV?
Jones Company is considering investing in a new piece of equipment that costs $600,000. The new equipment should provide cost savings of $150,000 per year over its 5-year useful life. What is the payback period (in years) for the new equipment?
Citywide Courier Services projects that demand for its services will rise for a period of three years before subsiding. It can lease additional communication for $1,000 at the beginning of every quarter for three years. Alternatively, it can purchase the equipment for $13,995 at 7.5% compounded quarterly. The salvage value of the equipment after three years is expected to be $4,000. Which option would you recommend? How much better is that option in today's dollars?
A restaurant is considering the purchase of a new stove. The cost of the stove is $28,000. The stove would decrease annual operating costs by $2,000 and generate $8,000 of annual cash sales. Maintenance for the new stove would be $1,000 per year. The old stove would be sold for $1,000. What is the payback period? Group of answer choices 3.5 years 2.5 years 28 years 2.8 years

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS